Technical Report

Ensuring Social Responsibility within Our Supply Chain

The GS Yuasa Group, together with the supply chain, will contribute to creating a sustainable society.

Major Procurement Programs

The GS Yuasa Group provides education and guidance on compliance and CSR (corporate social responsibility) to business partners, checks the way they manage harmful substances in products, responds to conflict minerals via surveys and encourages green procurement. We also started activities to help our business partners improve results as well as study sessions and presentations on how to boost quality.

Through better partnerships in the supply chain, we are improving the results of both our business partners and the GS Yuasa Group, while decreasing business risk.

Basic Procurement Policy

We intend to boost the results of our business partners and the GS Yuasa Group by workingto create better partnerships based on mutual understanding and relationships of trust.

Briefing Sessions on Production

GS Yuasa holds briefing sessions on production run by management as well as social gatherings every year to increase our major business partners' understanding of the GS Yuasa Group's management policies, annual business policy and basic procurement policy. This also deepens mutual understanding and strengthens relationships of trust with these business partners. In addition, we give awards to business partners who have made outstanding contributions to quality, price and the supply system over the previous fiscal year.

Ensuring Quality and Health/Safety

To promote activities that raise quality and enhance health and safety, including for business partners who supply parts and raw materials, the GS Yuasa Group provides guidance on quality reflecting the needs of our business partners as well as health and safety patrols, if required. In programs that raise quality, we share with business partners the target values and the results of quality defect analysis of products supplied to the Group and work to improve the quality of these items along with our partners. Target values for FY 2017 were 27 cases (GS Yuasa International Ltd. (GY)) and 1.17% (GS Yuasa Technology Ltd. (GYT)).

We believe that these activities create strong partnerships in the supply chain and are important to ensure the quality of products used by customers as well as the health and safety of our business partners.

Incidence of Quality Defects

﹡Period: April to March of the following year

Guidance on Quality for Business Partners

Response to Conflict Minerals

Every year, the GS Yuasa Group's domestic production division analyses how business partners deal with conflict minerals*1 through surveys using EICC and GeSI template forms.*2By checking throughout the supply chain, right back to refining, we can verify that none of our suppliers contribute to conflict minerals. The Group's production division overseas also continually investigates conflict minerals. In fiscal 2016, we formulated a policy to deal with these minerals and distributed it to our overseas affiliates.

*1

Conflict minerals are tantalum, tin, tungsten, gold and their derivatives used as resources by antigovernment armed groups who commit inhumane acts in the Democratic Republic of the Congo and neighboring countries.

*2

Templates issued by the Electronic Industry Citizenship Coalition (EICC) and Global e-Sustainability Initiative (GeSI), organizations working to tackling the problem of conflict minerals, to check whether conflict minerals have been used or not.

Policy on Conflict Minerals Overview

We will never procure or use conflict minerals.

If it is discovered that conflict minerals have been procured or used, we will contact the overseas site and supplier and take steps to avoid using them again.

We will continually investigate the use of conflict minerals. In cases of possible procurement and use of conflict minerals, when information on the purchasing source has not been disclosed, we will work to clarify information on the purchasing source.

Green Procurement

The GS Yuasa Group in Japan makes the following requests of business partners based on our Green Procurement Criteria.

Requirements for Business Partners

1. Operation of an environmental management system
2. Examination of chemical substances contained in items being supplied
3. Checking the legality of cutting down certain trees (logging)
4. Programs to identify and reduce CO2 emissions

For 2. above, we ask our business partners to examine substances using Chemical Substance Management Guidelines, which comply with international laws and regulations including EU directives (REACH, RoHS, etc.), and to test individual chemical substances as specified by customer needs.

GS Yuasa evaluates the appropriateness of stipulations to business partners concerning green procurement by checking and auditing the status of their response. By prioritizing those business partners that supply goods that conform to green procurement standards, we are reducing the environmental burden, including the burden within the supply chain.

Introduction of Environmental Management System by Business Partners (FY 2016, transaction amount base)

Promoting CSR-based Procurement

The GS Yuasa Group assesses business partners using a QCDE approach (quality, cost, delivery and environment). Going forward, we will add elements of CSR to these assessments to ensure that our social responsibility is being met throughout the supply chain. To achieve this goal, we will share the GS Yuasa Group's CSR Procurement Guidelines with our business partners and work to promote CSR procurement based on mutual cooperation. For new transactions, we will prioritize business partners that understand and accept the Group's CSR Policy.

In briefing sessions on production in fiscal 2017, we are asking our business partners to strengthen their CSR initiatives and to cooperate with us on CSR-based procurement, and we plan to identify CSR risk in the supply chain by analyzing survey and assessment results.